Television.

Tv Advertisers Worry About Growth Of New Pvrs

April 14, 2000|By Marla Matzer Rose, Los Angeles Daily News.

You can call them personal video recorders, PVRs or by brand names such as Tivo and Replay. The advertising industry has another word for these set-top devices that make it easier than ever for you to control your TV viewing: ad-killer boxes.

"Anything that allows me to fast-forward through programming I don't want to see is bad for us," said Allen Banks, executive media director for Saatchi & Saatchi North America and chair for the media policy committee of the American Association of Advertising Agencies. Banks reasoned, "These things are designed to save you time. You do that by skipping through programming, whether it's a show or a commercial."

PVR manufacturers know consumers don't want to sit through commercials. Replay in particular has highlighted its ability to "zap" through them.

"Hit QuickSkip and you jump forward 30 seconds instantly. With ReplayTV, you spend more time watching what you want to, less time watching what you don't," read newspaper ads for the gadget. Tivo hasn't played up this capability -- having decided to court favor among networks and advertisers -- and now Replay has backed off advertising the feature too. But both still allow you to fast-forward with ease through commercials.

If you don't watch their commercials, advertisers are wasting the millions of dollars they spend on them. How immediate a concern is this for them, for the networks that make their money by selling ad time -- and what will it mean for you? The answers, in order: immediate; sooner than they may think; and you'll be getting ads in more personalized and sneaky ways than before.

Commercials certainly won't go away. If anything, ads will become more targeted to specific consumer groups and will be more embedded in programming. "Are we going to find ways around (skipping through commercials)? Yeah, we will," said Russ Booth, managing director of science and technologies with MediaCom, Grey Advertising's media planning and buying arm. Said Booth, "It's all about relevance. People will watch commercials if they're entertaining, or interspersed throughout programming in some longer-form way."

Just as makers of tennis shoes and soft drink have found more places to stick their logos on TV, other advertisers will strike deals that gain them placement on TV shows. This is within FCC regulations if the company is credited with "promotional consideration" at the end of the program.

You may have already noticed how ads are becoming more entertaining, through the use of popular songs and by reviving classic ad icons such as Mr. Whipple and Charlie the Tuna. Now, PVR customers who supply their companies with information about their favorite shows and other lifestyle preferences will be shown ads directed at them.

"Say you're a bachelor," explained Sean Badding, vice president of the Carmel Group research firm. "With Tivo, General Motors, instead of showing you a mini-van commercial, can show you one for a sports car."

The networks will also find ways to keep advertisers happy. "They'll integrate ads into programming through things like product placement and banner advertising, which is like a ticker across the bottom of the screen," said Josh Bernoff, principal television analyst for the Forrester Group research firm. The potential loss of viewers for ads "is a really big problem if you're a free broadcast network. It's extremely easy to skip commercials; based on our projected levels of penetration (for PVRs), there will be an 8 percent reduction in ad viewing within five years, and 50 percent within 10 years."

Analysts expect PVRs to take years to reach the market penetration of the ubiquitous videocassette recorder: Bernoff's projection is for PVRs to be in 900,000 homes by the end of next year, compared with nearly 90 million homes that currently have VCRs.

But by 2005, that number is expected to leap to 14 million, which would make the PVR "the fastest-growing consumer electronic product in history . . . surpassing satellite TV and DVD players," Bernoff says.

A key reason analysts believe PVRs will take off is their ability to be combined with other essential electronics gadgets. Many families already have a snarl of hardware attached to their TVs: cable box, VCR, DVD player, video game console -- no desire for more boxes there. Within the next year, you'll see PVR boxes combined with satellite and possibly cable boxes, giving you more functionality and less clutter for an attractive price compared with $500 or more for a stand-alone PVR.

Still, there are so-called "early adopters" who are already buying PVRs. Advertisers are keenly aware that these folks are among their most desirable target market: They tend to be younger, upper-income consumers.